\section{Institutional design for complex ecosystems}
\label{sec:institutionaltheory}

Cities are complex systems facing difficulties in social, economic, and environmental domains due to rapid urbanization \cite[pp. 5-7]{SCHAFFERS2012} and the concept of smart city is seen as the possible solution for this. The behaviour of a city as a complex ecosystem has been presented in section \ref{sec:ecosystemstheory}. Although the concept of smart city is highly influenced by technological development, the importance of understanding institutional design in a complex system like the smart city is important. Furthermore, focusing on our research agenda, institutional design also plays a vital role in a complex technological system like an open data platform. \cite{JOOP} explains the necessity of considering institutional design in a complex technological system by saying

\begin{quote}
\textit{``[b]esides the design of the technological component, complex technological systems require an institutional structure that coordinates the positions, relations, and behaviour of the parties that own and operate the system. Aside from a technological design, an institutional design is also needed.''} \cite[p. 241]{JOOP}
\end{quote}

\noindent So, to answer our research question it becomes crucial to understand institutional design theory. In this chapter, we will describe the theory lying behind the institutional design and this will provide an understanding of the topic for further analysis and discussion.

\subsection{Institutional Theory}
\label{subsec:institutionaltheory}

A complex technological system (like an open data platform) consists of many stakeholders, so coordination between them is vital for it to function. This coordination between different parties can be established by implementing and fostering proper laws, policies, and norms. These implementations are regarded as institutions. \cite{JOOP} define institutions as,

\begin{quote}

\textit{``a set of rules that regulate the interaction between parties involved in the functioning of a (technological) system.''} 
 
\end{quote} 
 
\noindent Scharpf provides a comprehensive definition for institutions. He defines an institution as,

\begin{quote}

\textit{``[a] system of rules that structure the course of actions that a set of actors may choose''} \cite[p. 244]{JOOP}

\end{quote}
 
\noindent This also points out that not every set of rules or norms form an institution. Instead it has to be accepted by all the actors involved and should be practical and durable. Although institutions play a significant role in the functioning of complex technological systems, designing such institutions is not easy. Furthermore, \textit{`` [institutional] design cannot be a `blueprint' created through an intellectual process by a designer behind a desk''} \cite[p. 242]{JOOP}. So a design process is necessary for developing an institution for a complex technological systems. \cite{JOOP} formulate this as \textit{`process design'} and elaborates on it by saying,

\begin{quote}
\textit{``[a] process design consists of the whole of agreements and provisions aimed at the organizations and course of the design process''} \cite[p. 243]{JOOP}
\end{quote}

\noindent So in case of open data the institutional design should be preceded by a design process that describes the process for development of institutional design. Lack of proper attention in process design may lead to vague institutional design and this creates \textit{`cooperation problems'} as well as \textit{`the problem of collective action'}. \cite{JOOP} defines collective action as,

\begin{quote}

\textit{``a multimotive game [where] there is no overall goal, but each party has its own reasons to participate and because each party is performing rational rent-seeking behaviour (each party makes calculations in order to pursue its own interests), there are considerable costs and risks involved in the decision to join.''}

\end{quote}

\noindent This creates distrust among the stakeholders and deincentivises other actors to participate in the development of a technological system (like an open data platform). 

\begin{figure}[H]
  \centering
    \includegraphics[width=0.6\textwidth]{./Pictures/fourlayermodel}
    \caption{\textit{The four-layer model: levels of institutional analysis} \cite[p. 247]{JOOP}}
    \label{fig:fourlayermodel}
\end{figure}

\noindent Based on the knowledge we have gathered till now, it make sense to claim that a proper institutional design is needed for an open data platform (system). \cite{JOOP} provide more specific details about the institutions depending on the functioning of complex system. They define it as the \textit{`four-layer model'}, where the first level is of individual actors and the interaction between them; the second layer consist of formal and informal institutional arrangements that include formal and informal laws, contracts, and norms; the third layer consists of formal institutions like formal laws and regulations; and the fourth layer consists of informal institutional environment like culture, values and attitudes. \bigskip

\noindent Figure \ref{fig:fourlayermodel} depicts the four-layer mo\-del. This model illustrates that in a complex technological system the lower level institutions are constrained by higher level institutions whereas the higher level instituti\-ons are influenced by the lower le\-vel \cite[p. 247-248]{JOOP}.

\subsection{Metamodel for Institutional Design}

\noindent After understanding the role of institutions and further specifying different institutions at different levels of a complex system, it becomes important to understand how these institutions are designed. \cite{JOOP} provides a metamodel for institutional design. This model is a generic model and forms a heuristic tool for the development of design process, or at least it provides the conception of what logical steps should be taken to make an institutional design of a complex technological system.\bigskip
 
\noindent Figure \ref{fig:metamodelinstitutionaldesign} illustrates the design process for developing institutions. One should be careful while designing in practice, \textit{``preferably working with testing prototypes (pilot projects), piecemeal engineering (which enables learning), providing alternative possibilities, and using experts and stakeholders''} \cite[p. 255]{JOOP}. 

\begin{figure}[H]
  \centering
    \includegraphics[width=1\textwidth]{./Pictures/metamodelID}
    \caption{\textit{The metamodel: a generic model of the design process} \cite[p. 252]{JOOP}}
    \label{fig:metamodelinstitutionaldesign}
\end{figure}
 
\noindent This theoretical approach will enable us to understand the role of institutions while working with an open data/smart city system and depicts how different institutions influence the functioning of such a system. \newpage